REDEFINE YOUR COMPANY BASED ON THE COMPANY YOU KEEP. INTELLIGENT INSURER UNLEASHED - How do you improve the way people work and live?
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REDEFINE YOUR COMPANY BASED ON THE COMPANY YOU KEEP. INTELLIGENT INSURER UNLEASHED. How do you improve the way people work and live? #INSTECHVISION TECHNOLOGY VISION FOR INSURANCE 2018
By embedding themselves throughout society,
companies are blurring the lines between business
and personal—and blazing a trail for future growth.
This year’s Technology Vision for Insurance trends
highlight the rapid advancements in technologies that
are improving the ways people work and live—with
profound implications for the insurance sector.
Insurers are feeling the pressure to reinvent their and drinking habits. In addition, the 'Health
businesses to keep pace with rapidly evolving Age' function automatically determines the
technologies, competition, regulations, types of risk user’s health age and type, quickly analyzing a
and consumer expectations. Around 82 percent smartphone photo of recent health checkup
of the 623 insurance executives who responded results. Based on the results, it displays a
to the Tech Vision 2018 survey agreed that their recommended health improvement course.
organizations must innovate at an increasingly
rapid pace just to maintain a competitive edge. Some pioneers are starting to use blockchain to
create new value propositions and take friction
In line with this, leading insurers are embracing out of their interactions with other members of
emerging technologies such as blockchain, virtual the ecosystem. AXA, for one, has launched fizzy,
reality and intelligent automation to transform an automated, secure platform for parametric
their business processes. Zurich Insurance Group insurance against delayed flights. When you buy
affiliate, Farmers Insurance, has invested in software flight delay insurance, AXA records the purchase
and hardware to support a virtual reality (VR) in the Ethereum blockchain. This smart contract
pilot for home insurance claims adjusters.1 is connected to global air traffic databases. When
a delay of more than two hours is observed,
Its traditional training approach is to send employees compensation is triggered automatically.3
to a two-story home in Los Angeles, where
they’re shown how to assess damage caused by Individually, these technology-driven efforts
earthquakes, floods, and other catastrophes. With represent a company’s pursuit of the most
VR, Farmers can use six different floor plans and creative or disruptive product or service. But their
500 different damage scenarios to cost-effectively innovative efforts are part of a larger strategy:
expose adjusters to a wide range of scenarios driving company growth by making technology
they may encounter in the real world. This leads inseparable—and indispensable—in how things
to thousands of potential training experiences. get done. In the global survey, 84 percent of
insurance executives said that through technology,
For some insurance organizations, artificial companies are weaving themselves seamlessly
intelligence is already the public face of the business, into the fabric of how people live today.
handling everything from initial interactions via chat,
voice, and email, through to filling vital customer As the current revolutionary technologies reach
service roles. Dai-ichi Life Insurance Company in maturity in the coming years, only to be joined
Japan has introduced a cutting-edge FaceAI feature by the next emerging wave, that trend will grow
into its mobile app to encourage healthy living and in intensity. Along with their opportunities,
increase opportunities to engage with its customers.2 disruptive technologies bring new risks and
dangers. Quantum computing has the potential
The technology simulates what a person might to break the cryptographic standards that
look like in the future, based on a photo taken underpin the world’s financial systems; new
with a smartphone camera, factoring in smoking workforce models and platforms are shredding
2 #INSTECHVISION Technology Vision for Insurance 2018the long-accepted understanding of the term these high expectations can be transformed
'employee'; and as AI grows in capability and reach, into an enterprise strength. They’re using their
there will be large-scale failures and scandals increased, embedded technology interactions
around improper use of the technology. to build deeper partnerships with customers,
employees, governments, and the public.
Through new partnerships with customers,
employees, partners, and even governments, By explicitly defining the nature of their partnerships,
insurance organizations can help society to these leading companies are also defining the new
harness the power of these new technologies corporate social contract for the insurance industry.
while mitigating their risks. In the process, they AXA, as one example, has redefined its purpose as
will be empowering their own exponential growth. empowering people to live better lives, and has set
Aviva is one example of an insurance company out a five-year sustainability plan called the 2020
looking to partnerships as the way forward. Better Lives Partnership to deliver on its vision.
Through its Aviva Ventures arm, the company has Aims include sourcing 100 percent of the electricity
invested in connected-home startups Neos and it uses from renewable energy by 2025, making
Cocoon, and property startup Opun.4 Aviva in 2017 insurance affordable for 45 million emerging-
teamed up with Hillhouse Capital Management and market consumers, and helping customers
Tencent Holdings to develop a Hong Kong company collectively become 50,000 years ‘younger’
focused on digital insurance. Now, it is looking to through wellbeing programs. Recognizing
a partnership with Tesla to position itself at the that it won’t solve the big issues alone, AXA is
forefront of the transition to driverless vehicles.5 partnering with UN-Habitat to help cities become
more resilient and with NGOs such as CARE
to create better lives for 200,000 people.6
New expectations: Reading Lemonade became a public benefit corporation
in 2016, and was one of the first insurance
the labels of enterprises companies to be awarded provisional ‘B-Corp’
Leading insurers like Dai-ichi Life and Aviva certification. In so doing, the startup embraced a
understand that the world is reimagining itself mission of rebuilding insurance as a social good
around digital innovation and around the companies rather than a necessary evil. It works with non-
that provide tech-driven services, in much the profit organizations and has built into its business
same way as cities were built around railroads, or model the concept of giving back. It believes this
people rebuilt their lives around electricity. In an holds the promise of a better insurance experience
age where everything is connected, the lines that and a more valuable insurance company.7
have traditionally separated our society into neat Creating a consistent set of principles around
little boxes of customers, employees, citizens, their relationships will help insurers meet rising
companies, and even governments, are blurring. expectations. But it’s also becoming a key piece
Increasingly, in exchange for the access and impact of empowering the business to innovate and
people allow companies to have in their lives, grow. The commitments a company makes to
they expect partnerships, based not only on the partnership will become the 'nutritional value'
company’s products, but also its goals and its values. information that people are searching for. As
People are “reading the labels” of enterprise—and insurers build and extend their ecosystems,
insurance companies must define those labels for individuals and organizations with goals and ideals
themselves, or have the labels determined for them. that match their own will be natural partners.
While new expectations driven by a shifting
technology landscape can be daunting,
pioneering insurers have recognized that
3 #INSTECHVISION Technology Vision for Insurance 20182018 Tech Trends
This year’s Technology Vision for Insurance highlights
five emerging trends shaping the way technology is
increasing businesses’ impact across society.
Trend 1
CITIZEN AI As artificial intelligence grows in its capabilities—and
its impact on people’s lives—insurers must 'raise' their
AIs to act as responsible, productive members of
Raising AI to Benefit Business
society.
and Society
Trend 2
EXTENDED Virtual and augmented reality technologies are
removing the distance to people, information and
REALITY experiences, transforming the ways people live
and work.
The End of Distance
Trend 3
DATA Insurers must adapt existing capabilities to
combat a new kind of vulnerability: inaccurate,
VERACITY manipulated and biased data that leads to
corrupted business insights.
The Importance of Trust
Trend 4
FRICTIONLESS To fully power the external technology-based
partnerships they depend on for growth, insurance
BUSINESS companies must first move on from internal legacy
systems and re-architect themselves.
Built to Partner at Scale
Trend 5
INTERNET From AI to robotics to immersive experiences,
bringing intelligent environments to life means
OF THINKING extending enterprise infrastructures into dynamic,
real-world environments.
Creating Intelligent Distributed
Systems
4 #INSTECHVISION Technology Vision for Insurance 2018Trend 1
CITIZEN AI
Raising AI to Benefit Business and Society
With AI growing its reach throughout society, any
insurer looking to capitalize on AI’s potential must
also acknowledge its impact. Much more than just a
technological tool, AI has grown to the point where
it often has as much influence as the people putting
it to use, both within and outside the company.
With increasing autonomy and sophisticated As these examples show, AI-based decisions
capabilities, intelligent automation in insurance and tools are starting to have a profound impact
is evolving from robotic process automation on people’s lives and insurers’ businesses. A
to AI and moving from the back-office to the new imperative is becoming clear for insurance
front-line of customer service. As it does so, it organizations: they need to 'raise' their AI systems
enables insurers to supercharge efficiency and so that they reflect business and societal norms
elevate the customer experience. Our survey of responsibility, fairness and transparency.
found that four out of five insurance executives This powerful technology cannot be regarded
believe within the next two years AI will work as a simple software tool if it is to be trusted to
next to humans in their organizations, as a co- make automated decisions that affect the lives of
worker, collaborator and trusted advisor. customers, employees and other people in the
Already, Ant Financial Services in China uses an insurer’s ecosystem. Much like a human decision-
AI-driven image-recognition system to enable maker, AI needs to 'act' responsibly, explain its
vehicle insurance claims adjusters to make decisions, and work well with others. It’s up to
more-standardized and objective assessments insurers to 'teach' their AI to do these things.
of external vehicle damage.8 An Accenture
client in life and health insurance, meanwhile,
expects to reduce handling times for disability
and illness claims from around 100 days to less
than five seconds using machine learning, text
analytics and optical character recognition.
5 #INSTECHVISION Technology Vision for Insurance 2018Teaching software to learn Explainable AI
AI is a collection of advanced technologies that Given that an AI system is designed to collaborate
allow machines to sense, comprehend, act, and with people, companies must build and train their
learn. In the past, this kind of performance was AI systems to provide clear explanations for the
driven by rules-based data analytics programs, actions they take, in a format that people understand.
statistical regressions, and early 'expert systems.' Insurance executives realize this: 90 percent of those
But today’s learning-based AIs have a much we surveyed stated it is important for employees and
wider repertoire and are more likely to grow customers to understand the general principles used
into a constant member of the workforce. by their organizations to make AI-based decisions.
For insurers, this means changing the way they view This is, in part, a regulatory imperative. Government
AI, from systems that are programmed, to systems policymakers are considering rules to govern
that learn. Raising AI requires addressing many of the decision-making aspect of AIs. The spirit of
the same challenges faced in human education the European Union’s General Data Protection
and growth: fostering an understanding of right and Regulations, which take effect in 2018, gives
wrong, and what it means to behave responsibly; individuals a 'right to explanation' for decisions
imparting knowledge without bias; and building made by AI and other algorithms. But perhaps even
self-reliance while emphasizing the importance of more importantly, decisions based on obscure
collaborating and communicating with others. algorithmic criteria or bad data could harm an
With a successfully trained and raised AI, a insurer’s brand and open it up to litigation.
company essentially creates a new worker—one In the UK, an investigation by the BBC’s You
that can be scaled across operations. A large and Yours program compared car insurance
home and motor insurer in North America—one quotes from the five leading price comparison
of Accenture’s clients—is using deep learning to websites, first using the name of a white British
teach an algorithm to recognize whether a car BBC producer, and secondly a different common
is undamaged, damaged or written off based British name, ‘Muhammad Khan.’ All five sites
on pictures taken with a mobile camera. The returned higher prices for Muhammad Khan.9
algorithm continuously learns as it processes Former chair of the UK’s Equality and Human Rights
new cases, increasing its accuracy over time. Commission, Trevor Phillips, said: “What we think is
Teaching an AI begins with the right data, and a lot probably happening is that machines are learning
of it. A company’s AI starts from basic principles, but quicker ways to make those decisions (about
progressively builds its skills from set taxonomical premiums). And these machines have decided that
structures. The insurance companies with the best names like Muhammad and other ethnic sounding
data available to train an AI to do its job will create names are a good shortcut…for identifying a
the most capable AI systems. A business’s data particular type of person who is riskier. That might be
scientists must use care when selecting taxonomies to do with where they live, the type of car they drive.”
and training data—it’s not just about scale, but The Association of British Insurers has strongly
about actively minimizing bias in the data. denied that the way in which insurance premiums
are quoted is discriminatory. Nonetheless, the
controversy highlights how important it is that AI
decisions are transparent and explainable. This is
especially the case as insurers tap into new data
sources and categories to make decisions about
paying claims or setting premium prices. For
example, Aviva offers life insurance policyholders
lower quotes for auto insurance, while Admiral in
the UK wanted to use the language in Facebook
posts to gauge how dangerously a person would
drive—before Facebook nixed its plan.10
6 #INSTECHVISION Technology Vision for Insurance 2018Responsible AI Conclusion:
Regardless of the exact role AI ends up playing in Preparing for more
society, it represents its company in every action
Insurance leaders will take on the challenge
that it takes. What happens if an AI-powered claims
of raising AI in a way that acknowledges its
adjuster rejects a life insurance claim based on an
new roles and impact in society. In doing so,
ill-founded suspicion of fraud at a time that a grieving
they’ll set the standards for what it means to
parent needs the money to pay a mortgage after
create a responsible, explainable AI system.
the death of the family’s breadwinner? How can life
Moreover, they’ll build trust with customers
insurers make responsible use of a growing selection
and employees, who are understandably wary
of health data—fitness data, biometric data, even
of intelligent but opaque systems making
genetic data—for automated decision-making?
decisions that directly affect their lives.
Is it fair for an algorithm to decide someone with
a low credit score will pay a higher premium, not
because he is a less safe driver, but because he
is more likely to file a claim for a small accident
than a wealthier driver who can pay out of pocket? 70%
These questions loom large as a combination of
big data and smarter AI enable insurers to better
of insurance executives
calculate risk on an individualized basis, rather report that their
than pooling risk across large groups of people or
organizations requiring the same kind of cover.
organizations seek to
Society and regulators are likely to reject an gain customer trust
insurance business model that uses algorithms and and confidence by being
data to price insurance beyond the reach of people
in need. Businesses that hesitate to consider their AIs transparent in their
as something that must be 'raised' to maturity will be AI-based decisions
left struggling to catch up with new regulations and
public demands—or worse, cause strict regulatory and actions.
controls to be placed upon the entire AI industry.
77%
of insurance executives
agree: AI is advancing
faster than their
organization's pace
of adoption.
7 #INSTECHVISION Technology Vision for Insurance 2018CITIZEN AI:
WHY NOW?
ADVANCES IN AI CHEAPER, MORE POWERFUL
ALGORITHMS COMPUTING
Improvements in deep learning have allowed data Deep learning AIs require large amounts of
scientists to write AI algorithms that can teach computing power. Today, cloud service providers
themselves to classify huge datasets and make such as Amazon Web Services and Google offer
accurate predictions. affordable supercomputer levels of performance for
AI applications.
EXPLOSION IN A MORE HUMAN INTERFACE
USABLE DATA SETS Advances in natural language generation and
recognition make the use of AI more accessible
Deep-learning AIs improve when they are given more
to all.
data to create inferences. In the past, labelled data
was hard to find. But now, large proprietary
and open-source data sets—like the 14 million
images in the ImageNet dataset—have become
widely available.
8 #INSTECHVISION Technology Vision for Insurance 2018CITIZEN AI: DECISION POINTS DECISION: DECISION: HOW INTEGRAL WILL SHOULD AI-BASED ARTIFICIAL INTELLIGENCE SOLUTIONS BE BE IN YOUR BUSINESS EXPLAINABLE? IF SO, GOING FORWARD? WHICH ONES? If your enterprise isn’t already on an artificial For each instance of AI, assign an 'explainability intelligence journey, it’s time to embark on one. Pick rank'—how explainable or transparent are the a single business challenge to focus on, and assign recommendations or decisions the AI system is a team of one or two people to research how others returning? Evaluate the situations where results are have tackled a similar challenge. Have the team build not explainable, but should be, and open discussions a plan for how your enterprise will implement AI. on how to make them more explainable. DECISION: DECISION: ARE YOU RAISING YOUR AI DO YOU WANT TO GO WITH THE ‘RIGHT’ DATA? IT ALONE? If you’re already working with AI, catalog all the data Early entrants in new industries often enjoy sources used in training and testing of your systems. outsized advantages over those slow to adapt. But Regularly audit these data sources, seeking instances participating in standards bodies is also an effective where there is bias in the training data. Similarly, are strategy to gain an early advantage. Consider joining there bias conditions that the test data does not an AI-focused consortium (e.g, Open AI, Partnership account for? Act to minimize bias in training data— on AI to Benefit People) to get a head start. consider synthetic data creation as a mechanism to achieve this. 9 #INSTECHVISION Technology Vision for Insurance 2018
AI is a collection of advanced technologies that allows machines to sense, comprehend, act, and learn.
Machine Learning
A branch of AI that provides systems with the ability to learn without being explicitly programmed.
Most commonly, machine learning algorithms are data-driven learning systems employed to classify
new data assets into a target set of categories.
Supervised Learning Unsupervised Learning
Machine learning algorithms that make Machine learning algorithms that are
use of labeled training data. Labeled data used when only unlabeled data is available.
entails positive and negative One technique such systems use is clustering
examples of the target categories. —grouping similar items together without
For example, if a system is distinguishing assigning the members of the cluster to
cats from dogs in pictures, each picture a predefined category. This often yields
would be ‘labeled’ as containing categories and connections a human
either a cat or a dog. would not discover on their own.
Decision Trees
A tree-like model that attempts to build an exhaustive representation of all possible decisions and their
associated consequences within a particular domain. Each node represents a test or question, each
branch is an outcome of that test/question, and each leaf node is either a decision or a label. The goal
of using decision trees is to achieve perfect classification with a minimal number of decisions.
Deep Learning
Also known as deep artificial neural networks, this subset of machine learning attempts to mimic
the non-linear connections of neurons in the human brain to recognize patterns in images,
sounds, and other data. In the fields of machine vision and natural language processing, deep
learning has been responsible for many recent advancements.
Reinforcement Learning
Instead of explicitly labeling data, reinforcement algorithms learn by receiving rewards—reinforcement.
In a game situation, for example, the reward might be winning the game. The algorithm can then
play the game against itself millions of times to gain expertise. Sometimes humans need to decide
whether the algorithm receives an award, but human participation is generally minimal.
Note: The techniques described here are a small subset of advanced AI techniques being used
today; these were chosen to give more context to terms and concepts used throughout this trend.
Figure 1—AI: From Machine Learning to Deep Neural Networks and Beyond.
10 #INSTECHVISION Technology Vision for Insurance 2018Trend 2
EXTENDED REALITY
The End of Distance
Immersive experiences are changing the way people
connect with information, experiences, and each other.
Through virtual and augmented reality, extended reality
(XR) is the first technology to 'relocate' people in time
and space—and it’s bringing about the end of distance.
Even in industries such as insurance, that sell Policyholders can work with an insurance adjuster
products and services that can be digitized with at the first notice of loss stage to perform a
relative ease, physical distance remains a tactical complete and secure remote inspection of
pain point for organizations, their workforces and a damaged property. Symbility enables the
their customers. From claims adjusters who need adjuster to use the camera on the policyholder’s
to evaluate damage to properties in areas hit by mobile device to capture scope information. The
natural disasters to agents seeking optimized company envisages that it might in future use
training or customers wanting personalized advice, AR to take exact measurements of damaged
distance remains a source of cost, inconvenience areas through the policyholder’s phone.11
and inefficiency in insurance processes. Another potential application of AR might be to
Insurance companies are increasingly turning to show the customer options for how a contractor
XR technologies to remove the hurdle of distance, might repair his home after fire or water damage.
improving access to people, information, and AR would put a digital overlay of the repaired
experiences. Eighty-five percent of insurance damage on the video and image of the home,
executives in our Technology Vision 2018 survey which the user sees on the camera display of his
believe it is important to leverage XR solutions mobile device. This could make it quicker and
to close the gap of physical distance when easier for the customer to evaluate and approve
engaging with employees or customers. a repair quote from the insurer’s contractor.
With immersive environments enabling employees One of the greatest limitations in getting work done
to 'be' anywhere, the use of XR-based solutions is access to information. Whatever material is not
such as virtual reality (VR) and augmented already stored in a worker’s head must be pulled
reality (AR) is growing across the insurance from a spreadsheet or a tutorial video, distracting the
workforce, and even in customer-facing products person from the task at hand. Here, XR is helping to
and services at some pioneering insurance eliminate the distance between insurance employees
companies. Symbility Video Connect, for example, and the information they need to do the job.
is a live video collaboration tool that helps
consumers own more of their claim process.
11 #INSTECHVISION Technology Vision for Insurance 2018Hands-free efficiency Conclusion: From here
For auto insurance, Scope Technologies has trialed to everywhere
using VR and telematics data to reconstruct a
Today, XR is still evolving. Challenges around
vehicle accident to determine who was at fault
processing lag; device battery life, cost and wearer
and if the accident could have been prevented.12
comfort; low market penetration of devices like
Claims adjusters could use AR devices such as
the Oculus Rift and HoloLens; and the expense
Microsoft’s HoloLens eyewear to measure the
of content creation remain barriers to its maturity.
dimensions of a damaged property, as well as to
As these limitations are addressed, XR will grow
capture video and images to create a 3D model.
in capability and impact. To prepare for a world
Zurich Insurance, for instance, is using AR glasses where the most powerful experiences might
to increase efficiency among its risk engineers and be virtual, insurers must focus on tactical uses
field inspectors. These field workers often need to of it today. Well-planned forays into immersive
work hands-free as they climb ladders or work in experiences will help them build the capabilities
tight spaces. Capturing work progress and accessing they need to transform entire industries tomorrow.
data such as checklists and site plans on a mobile
84%
device interrupts their workflow. Using smartglasses,
they can access information, consult with other
experts and view multiple screens of information.13
Another increasingly popular application for XR is of insurance
training or reskilling distributed workers for a digital executives state it is
future. Students and trainers can meet in virtual
reality, and share a learning experience that feels very important for
more like classroom training, even if they’re scattered their organization to
across the globe. XR can also allow insurers to run
realistic training simulations that give people hands- be a pioneer in XR
on experience of work situations. XR can deliver
first-hand training in challenging or potentially
solutions.
dangerous situations without real-world risk.
Though still nascent as a tool for customer
service, some insurers are also experimenting
with XR in the customer experience. PNB 84%
MetLife India, for example, in 2016 launched an
experiential VR platform built in collaboration
say XR will create
between MetLife’s LumenLab innovation center a new foundation
in Singapore and PNB MetLife in India.
for interaction,
Called conVRse, the solution enables customers
to enter a 3D simulated room to speak to PNB communication,
MetLife’s insurance expert 'Khushi', a virtual assistant. and information.
The goal is to provide an immersive, personalized
experience to customers through the VR headset
available in 15 PNB MetLife branches across 10
cities. The company claims over 98 percent of
the 8,000-plus customers serviced through
conVRse described their experience as positive.14
12 #INSTECHVISION Technology Vision for Insurance 2018Virtual Reality Augmented Extended Reality
(VR) Reality (AR) (XR)
VR visually takes the user out AR overlays digital objects XR refers to the spectrum of
of her real-world environment (information, graphics, sounds) experiences that blur the line
and into a virtual environment, on the real world, allowing between the real world and the
typically using a headset for the user to experience the simulated world. The technology
viewing coupled with hand-held relationship between digital and immerses the user through
controllers to navigate the physical worlds. visuals, audio, and potentially
virtual space. olfactory and haptic cues.
FOR SALE
13 #INSTECHVISION Technology Vision for Insurance 2018EXTENDED REALITY:
WHY NOW?
XR OFFERS MORE CONSUMER SPENDING
EFFECTIVE TRAINING: ON EXPERIENCES IS
The pace of change in technical fields means that
training on the job is an ongoing pursuit. XR will help
INCREASING:
Spending on experiences, like recreation and travel,
fill that skills gap with immersive training.
has been on the upswing for more than a decade. XR
is a way to connect with consumers who are hungry
for engaging experiences.
XR SUPPORTS FLEXIBLE PLATFORMS NOW EXIST
WORK PREFERENCES: TO MAKE XR MORE WIDELY
XR supports an on-demand workforce approach,
allowing businesses to engage an ever-growing
AVAILABLE:
The need to create content to use in XR has been
pool of talent that demands flexibility. XR allows
a barrier to widespread adoption. With platforms
employees to see what others see, make changes
like Google ARcore and Apple ARkit, thousands of
in real-time, and more easily collaborate, regardless
developers can now create and share XR content,
of location.
thus extending XR’s reach.
14 #INSTECHVISION Technology Vision for Insurance 2018EXTENDED REALITY:
DECISION POINTS
DECISION: DECISION:
HOW CAN XR HOW WOULD YOU BEST
TECHNOLOGIES MAKE ENGAGE WITH YOUR
YOUR WORKFORCE MORE CUSTOMERS THROUGH
PRODUCTIVE? EXPERIENCES?
When employees seek information they’re not Companies that transition from delivering services
being productive. Look for instances where they, to delivering experiences often find new customers
and agents, need to find policy documents, subject in younger demographics. Younger consumers
matter experts, financial data and so on, and gauge are critical for growth; define a portfolio of ways to
the productivity gains of making the information connect with them through XR experiences.
immediately available to them. The solution may be
augmented glasses, an office in VR, or even financial
data available via Alexa for Business.
DECISION: DECISION:
WOULD XR MAKE YOUR ARE THERE WAYS FOR
TRAINING PROGRAMS CUSTOMERS TO HAVE
MORE EFFECTIVE? EXPERIENCES WITH YOUR
During and after digital transformations, insurance
companies find it necessary to engage in new
BRAND?
How can your enterprise eliminate the distance
types of training for their employees. Use this as
that separates your customers from information,
an opportunity to explore how XR might make the
training and/or experiences? How can you offer them
training more engaging and memorable.
more personalized advice and products using XR
technologies?
15 #INSTECHVISION Technology Vision for Insurance 2018Trend 3
DATA VERACITY
The Importance of Trust
Insurance is more data-driven than ever, but inaccurate
and manipulated information threatens to compromise
the insights that companies rely on to plan, operate, and
grow. Unverified data is a new type of vulnerability—one
that every insurer leveraging digital technologies must
address. Left unchecked, the potential harm from bad
data could become an enterprise-level existential threat.
Data has always been the lifeblood of insurance, For example, commercial insurers partner with
fueling every aspect of the business from makers of industrial equipment to use sensor data to
underwriting risk to detecting fraudulent claims. guide preventative maintenance in mines, factories
But today, insurers have access to more real- and other plants. Meanwhile, life insurers use fitness
time data than ever before, from sensor data data from wearables to encourage customers to
from policyholders’ connected cars, homes and lead heathier lives and auto insurers use telematics
workplaces to data from drones and satellite data to coach people about driving safely.
imaging to external data sources such as ZhongAn Online Casualty and Property Insurance,
government databases and social media. the Chinese internet-only auto insurer, is an example
Not only are these new data sources helping of a carrier using data to create a disruptive business
insurance carriers to make better operational, model. The company has established a big data
risk and pricing decisions; they are also enabling alliance with Sinosafe Property Insurance and Urtrust
them to come to market with innovative Insurance. Through the alliance, ZhongAn has
business models. One of the opportunities lies in collected data related to more than 3 million vehicles.
monetization of data, algorithms and platforms— It will soon launch usage-based insurance products—
which Accenture estimates could be worth still relatively new in the Chinese market—with data
$28 billion to insurers in the next five years.15 enabling it to deliver a high level of personalization.16
Meanwhile accurate, real-time data enables insurers As data unlocks exciting possibilities for insurance
to offer pay-as-you-go and usage-based insurance organizations, it exposes them to a new type of
solutions that are based on personalized, real- vulnerability in the form of inaccurate, unverified, and
time assessment of risk rather than on historical manipulated data. Highlighting the risk is the fact
data and averaged pricing. What’s more, insurers that 80 percent of insurance executives report their
are leveraging data to incentivize customers organizations are increasingly using data to drive
to reduce their exposure to risks and to help critical and automated decision-making at scale. A
them avoid incurring losses in the first place. recent study estimated that 97 percent of business
decisions are made using data that the company’s
own managers consider of unacceptable quality.17
16 #INSTECHVISION Technology Vision for Insurance 2018But insurance companies don’t need to companies will generate more value from their
accept the risk of poor data veracity. They data, and build a strong foundation for the success
can address this new vulnerability by building of other digital transformation initiatives.
confidence in three key data-focused tenets:
• Provenance, or verifying the history of data
from its origin throughout its life cycle. Creating a data
• Context, or considering the intelligence practice
circumstances around its use.
Insurers don’t have to start from scratch to grade
• Integrity, or securing and maintaining data. the veracity of their data. The foundational elements
To drive these principles throughout its business, of a data intelligence practice involve ramping up
every insurer should build a 'data intelligence' existing efforts: embedding and enforcing data
practice or function, drawing from existing data integrity and security throughout the organization,
science and cybersecurity capabilities. Its job will while adapting existing investments in cybersecurity
be to grade the truth within data, by establishing, and data science to address data veracity issues.
implementing, and enforcing standards for Grading data will also require developing an
data provenance, context, and integrity. understanding of the behavior around it. Companies
must be vigilant in uncovering and addressing ways
stakeholders might manipulate data for their own
Risks and rewards benefit. Whether it’s a person creating a data trail by
driving in a vehicle equipped with telematics, or a
of data veracity sensor network that reports temperature readings
One of the first steps this practice should take is to for an industrial system, there’s an associated
ensure that the right data is being used throughout behavior around all data origination. Insurers
decision support systems and processes. Insurers must build the capability to track this behavior
are investing heavily to determine what they can as data is recorded, used, and maintained.
get out of data-driven insights and technologies, Insurers should also seek to understand the
but they also need to invest in what is going into behavior of malicious actors, who themselves use
them. How can insurers be certain, for example, that automated technologies to manipulate data for
they are receiving accurate data from customers’ purposes such as advertising fraud. Among our
connected devices or that the data they are receiving survey respondents, 34 percent reported that
from their ecosystem partners is clean? Even the they had been the target of practices such as bot
most advanced analytics and forecasting system fraud, spoofed sensor data or falsified location
is only as good as the data it is given to crunch. data; another 32 percent said they had most likely
The risks around poor data veracity grow as more experienced such an attack but could not verify it.
organizations push toward fully autonomous With the right understanding, insurance organizations
decision-making, with critical implications for can provide cybersecurity and risk management
business and society. With a potential regulatory systems with a baseline of expected behavior around
and consumer backlash—Consumers Union in data. These baselines will empower companies
the US, for example, is criticizing auto insurers for to detect data tampering that predicates poor
unfair and opaque use of big data18—it is critical for decisions. Some companies are beginning to
insurers to show that their datasets are accurate, use data science capabilities to flag data that
unbiased and used in a fair and transparent manner. deviates from a known broader context.
According to our survey, 80 percent of insurance
executives agree that organizations are basing their
most critical systems and strategies on data, yet
many have not invested in the capabilities to verify
the truth within it. By making these investments,
17 #INSTECHVISION Technology Vision for Insurance 2018Incentivize the truth Conclusion:
Understanding anomalous behavior will help Confidence for the future
companies address the danger of using false
Strong cybersecurity and data science capabilities
data and making faulty decisions. But a data
are prerequisites for building a data intelligence
intelligence practice must also be charged with
practice to ensure data veracity. Among other things,
uncovering and addressing the factors contributing
this group will determine the embedded risks across
to the creation of false data in the first place.
a portfolio of data supply chains, and set standards
If an insurer depends on data collection, it is
for how much risk is acceptable, based on business
potentially incentivizing data manipulation.
priorities and implications of automated decisions.
Consumer reactions to dynamic pricing algorithms
As such, the data intelligence practice should
or incentives for certain behaviors or fears about
report up to the Chief Digital Officer, and
how data may be used mean there is a growing need
collaborate closely with the Chief Information
for companies to understand people’s motives for
Security Officer. Organizing in this way, with a
disclosing—or disguising—data. Fitness wearables
dual mandate to maximize veracity and minimize
users who earn rewards from life insurers for
incentives for data manipulation or distortion,
meeting exercise goals, for example, have found
will support an insurer that can be confident in
creative ways to game the system. One inventive
its insights, and alert to new potential threats.
user told CBS News that he inserted his Fitbit in
a sock and put it in the tumble dryer to meet his
26%
target for steps walked, without even moving.19
Consumers who do not trust organizations to use
their data for a benign purpose or in a responsible of insurers say they
manner may try to mask their real behavior
and data—especially in a world where firms like validate data sources to
Cambridge Analytica stand accused of using some extent but admit
personal information harvested from Facebook
without permission to micro-target US voters
there is more they should
with personalized political advertisements.20 do to ensure data quality;
If a large percentage of people attempt to 19% admit they try to
trick algorithms—for example, while trying to validate their main data
protect their privacy online using tools such as
TrackMeNot or AdNauseam—insurers could lose sources but are not sure
money or collect inaccurate data about their of the quality.
customers. The result is distorted insights.
The presence of bad data in a system isn’t
80%
always the result of malicious intent, but may
be a sign that a process isn’t working the way
that was intended. Uncovering processes that
inadvertently incentivize deceit is a key step of insurance executives
to improving the truth in data across a system. agree automated
Incentivizing truth will allow companies to reduce
noise in data, so that real threats stand out. systems create new
risks including fake data,
data manipulation, and
inherent bias.
18 #INSTECHVISION Technology Vision for Insurance 2018DATA VERACITY:
WHY NOW?
INCREASED USE OF GROWTH IN SENSOR
ANALYTICS: DEPLOYMENT:
Data-driven analytics and decision-making tools Companies have jumped on the availability of cheap,
present new opportunities for businesses to refine small, easy-to-incorporate sensors for data collection.
threat-detection capabilities. But in their haste to gather more and more data,
some have left the door open to manipulation of
cheap, unprotected sensors.
MALICIOUS ACTORS:
Advertising bot fraud cost companies worldwide
an estimated $6.5 billion in 2017.21 Companies are
looking for cyber-hunting capabilities that use
machine-learning defenses to pick up anomalies in
real-time data sources.
19 #INSTECHVISION Technology Vision for Insurance 2018DATA VERACITY:
DECISION POINTS
DECISION: DECISION:
ARE YOU ABLE TO ATTRACT, HOW IMPORTANT IS DIGITAL
TRAIN, AND RETAIN THE HYGIENE IN YOUR CULTURE?
TALENT NEEDED FOR A HOW IMPORTANT SHOULD
CULTURE OF STRONG DATA IT BE?
PRACTICES? Practicing 'digital hygiene'—routine habits designed
to maintain security—can be an effective way
There is a great need for communication,
to improve enterprise culture. One way to begin
understanding, and agility among cybersecurity,
this digital hygiene journey is to have employees
data science, and AI staff. Consider implementing
compete in building security-based, future-focused
a rotational program to expose more employees to
scenarios. Use the most prevalent scenarios to
these disciplines. A greater understanding of the
prioritize security measures and training programs.
capabilities and limits of these areas will spread
across your enterprise while increasing collaboration.
DECISION: DECISION:
HOW DOES YOUR ARE YOU INCENTIVIZING
ENTERPRISE GRADE DATA? USERS TO GAME YOUR
Document the data flowing into and out of your
organization, prioritizing processes that employ
SYSTEMS?
Information asymmetries tend to incentivize data
autonomous decision-making. For each in-flow and
manipulation and gaming of autonomous systems.
out-flow, ask the responsible teams to grade their
List the information asymmetries throughout
confidence in the truthfulness of data under their
your data supply chain. Establish a culture that
care. Ask the same of any data provided by third
minimizes these asymmetries to protect against data
parties. Develop a rubric to ensure
manipulation and gaming of your systems.
consistent grading.
20 #INSTECHVISION Technology Vision for Insurance 2018Trend 4
FRICTIONLESS BUSINESS
Built to Partner at Scale
Through technology-based strategic partnerships,
insurers can expand into more ecosystems than ever
before. But legacy business systems weren’t built to
support this kind of expansion. Insurers need to adopt
microservices architectures and blockchain today to
build a strong foundation for tomorrow’s partnerships.
Today’s insurance business partnerships are based Insurers such as Aviva in the UK 24, and Nationwide25
not only on strategy, products and services, but and Liberty Mutual Insurance26 in North America,
also on the merging of technology and the sharing are starting to leverage platforms such as Amazon’s
of platforms. Just look at how allies from the auto Alexa, and their surrounding ecosystems, to
manufacturing, ride-hailing, insurance, technology access new customers or create new customer
and public sectors are collaborating to overcome experiences. In commercial insurance, The
the regulatory, technical, commercial and behavioral Hartford Steam Boiler Inspection and Insurance
barriers to wide deployment of self-driving vehicles. Company invested in smart industrial sensor
In Japan, the Toyota Research Institute, MIT Media manufacturer Helium and a predictive machine
Lab and other partners are exploring the use of diagnostics company called Augury to position
blockchain and distributed ledger technology for itself at the forefront of the Internet of Things.27
sharing autonomous vehicle data. Gem, Toyota Many traditional insurance organizations are also
Insurance Management Solutions and Aioi Nissay partnering with, and investing in insurtechs and
Dowa Insurance Services are collaborating on a startups to gain access to their technology and
usage-based insurance platform for this initiative.22 skills. Allianz Ventures, for instance, participated
Similar partnerships are starting to come to life in in a $45 million financing round for quantum
the connected home and the connected workplace, computing software development firm 1Qbit in 2017,
too. For example, home insurers such as USAA, just one of the 120 private technology investments
American Family, Liberty Mutual and State Farm by insurers and reinsurers during the year.28
in the US, and AXA and LocalTapiola in Europe
are working with connected home technology
companies to personalize premium pricing and
help customers avoid claims in the first place.23
21 #INSTECHVISION Technology Vision for Insurance 2018Expanding beyond legacy As opposed to a monolithic design, where
applications are built with a single codebase, the
Gaining an advantage over the competition means microservices approach breaks down applications
forging these strong and plentiful partnerships. to their simplest component functions. Each
Our survey shows 38 percent of insurers work function is treated within the organization as
with double or more partners than they did two a single service, equipped with its own team
years ago. But it is critical for insurance leaders to of engineers responsible for maintaining their
recognize that their organization’s own technology own code and, importantly, API endpoint.
will serve as the foundation for these strategic
Larger applications are then strung together by
relationships—and could also be holding them back.
making API calls to each of the independent
The key problem facing insurers: legacy systems services—a boon to partnerships as the
that weren’t built to support technology-based API calls could include services outside the
partnerships. These systems were built in silos, organization. Internally, the benefits remain vast:
intended to operate only within the business, applications become lightweight, dynamically
with the assumption that change would be slow scalable, and more resilient. Several leading
and steady. Now, as companies expand their insurers are using APIs to expand their business
networks, engage in ecosystems, and shift rapidly ecosystems and create new revenue streams.
between them, outdated systems that can’t keep
Allstate is one of them. Allstate Roadside Services
pace will be the biggest barrier to growth.
division launched the Good Hands Rescue APIs,
Each insurance company’s technology architecture which allow third parties to leverage Allstate’s
must evolve to one that supports partnerships roadside assistance network in their own apps. Arity,
at scale, with microservices and blockchain a tech company spun out of Allstate, offers APIs
playing key roles. A microservices approach that let third parties tap into Allstate’s aggregate
will foster agility as applications become more data on driver behavior and risk prediction tools.29
modular, enabling rapid integration with many
MetLife, the multiline, multinational insurer, is an
new partners. Blockchain will play a key role
example of an insurance carrier that is reaping
in creating, scaling, and managing business
rewards from its use of microservices. It has
relationships through its ability to hold partners
deployed containers as a service (CaaS) from Docker
accountable without the need to first build trust.
and Microsoft Azure cloud services to improve its
agility, despite the prevalence in its IT environment
of legacy systems that date back 30 years.
Change starts at home By using containerized microservices, the
A microservices architecture uses a suite of tools company has been able to break the business
like application programming interfaces (APIs), logic of old, monolithic applications into
containers, and cloud to break applications into smaller pieces and deliver a more modern
simple, discrete services. Microservices delivers user experience on top of its legacy systems
internal benefits like application scalability of record. The portability and efficiency of this
and reliability. It also provides a foundation new environment has enabled MetLife to reduce
for companies to forge partnerships quickly virtual machines in use by 70 percent and gain
and easily, seamlessly integrating services operational scale through cloud infrastructure.30
without hindering partners or customers. It sees this project as key to its future agility.
22 #INSTECHVISION Technology Vision for Insurance 2018How does microservices
APPLICATION ARCHITECTURE work? SCALING & SHARING
OLD
APPLICATION ARCHITECTURE
MONOLITHIC SCALING & SHARING
RIGID SCALING
APPLICATION & SHARING
OLD MONOLITHIC RIGID SCALING
APPLICATION & SHARING
NEW MODULAR
MICROSERVICES SCALING &
SHARING
NEW MODULAR
MICROSERVICES SCALING &
SHARING
Figure 2—Microservices Diagram.
Figure 2—Microservices Diagram.
23 #INSTECHVISION Technology Vision for Insurance 2018Pivoting between system to facilitate reinsurance transactions.31
partnerships Allianz is focusing on making catastrophe swaps
simpler, faster, and more tradable by writing them
If microservices is the key to scaling and integrating on a blockchain platform32, while Tokio Marine
partnerships, blockchain will be critical to managing achieved an 85 percent reduction in the time it
and operating them. Insurers will be challenged to takes a shipper to receive an insurance certificate
maintain a higher volume of partnerships than ever when it tested a blockchain-based marine cargo
before, and rapidly pivot between partners, without policy33. Other processes where blockchain could
sacrificing the integrity or security of their products find a role include subrogation as well as shared loss
and services. Blockchain will address this complexity history among carriers that provides visibility into
by acting as a surrogate for trusted relationships. the claim history of potential insureds and property.
Blockchain is a distributed ledger system that While many blockchain initiatives are still in early
stores groups of transactions (the 'blocks') stages, 84 percent of insurance organizations say
and then links and sequences the list of blockchain-based ledgers and smart contracts are
transactions using cryptography (the 'chain'). reinventing the way businesses engage with new
The innovation is that no single organization partners. Around 46 percent expect to integrate
owns the blockchain—it is distributed across a blockchain into their systems in two years or less—
peer-to-peer network, with redundancies in the they will be the early adopters that set the pace.
blocks and consensus mechanisms to ensure
that no one can manipulate the transactions.
Blockchains can either be public, like Bitcoin or
Ethereum, or as in many enterprise use cases, they
may be developed privately or by consortiums.
Blockchain is being explored across a wide range
of use cases, from identity management to voting,
cloud storage, and smart contracts. Essentially, any
business that could benefit from an immutable
database could be disrupted by blockchain.
Because the information stored within a blockchain
is replicated and shared among a network of
partners, participants have no inherent need to
trust each other, or an intermediary. They can
simply delegate trust to the system. Coupled with
smart contracts, blockchain makes it possible for
organizations to pursue broader networks, on-board
new partners, or enter new ecosystems—with a
level of ease and speed impossible in the past.
In insurance, carrier-to-carrier transactions will
benefit from the speed, traceability, and consensus
mechanism that blockchain provides. Early
initiatives are targeting reinsurance because it is a
complex but standard process for which process
improvements directly yield value. B3i, a group
of large insurers dedicated to exploring possible
uses and standards for blockchain technology, has
developed a prototype smart contract management
24 #INSTECHVISION Technology Vision for Insurance 2018Conclusion: The future What is blockchain?
of partnerships
Insurers must reshape their business from top
to bottom to meet the challenges of creating
and managing relationships at scale. Companies
should begin to re-evaluate how they architect
their applications and services, moving toward
microservices to set the foundation and quickly
build the relationships needed for growth. TRANSACTION BLOCK EDIT
REQUEST CREATED
For many, blockchain will become the future
of how businesses transact, and leaders must
begin investing in the relevant skills and tools
today. Those that empower technology-based
relationships will find a clear path to growth,
and new opportunities for innovation.
66%
of insurance executives
acknowledge that blockchain and TRANSACTION / TRANSACTION /
smart contracts will be critical or BLOCK BLOCK
VERIFIED BROADCASTED
very critical to their organizations
over the next three years.
70%
report their organization's use of
microservices will increase over
the next year.
BLOCK ADDED TRANSACTION
TO CHAIN COMPLETED
Figure 3—Blockchain Diagram.
25 #INSTECHVISION Technology Vision for Insurance 2018FRICTIONLESS BUSINESS:
WHY NOW?
TECH-BASED PARTNERSHIPS TOMORROW’S STANDARDS
ARE ALREADY A REALITY FOR ARE BEING CREATED TODAY:
BUSINESSES: Blockchain will become the basis for inter-
organizational engagement, with 85 percent of
Competitive advantage and growth are being driven
insurers saying smart contracts will dramatically
by partnerships: 79 percent of top-performing
evolve their transactional methods and enable
companies identified by Gartner indicate they
digital trust.
participate in digital ecosystems.34
ECOSYSTEM COMPLEXITY PARTNERS ARE WORKING
IS BECOMING A BIG TOGETHER TO DEVELOP NEW
CHALLENGE FOR BUSINESS: BLOCKCHAIN USE CASES:
73 percent of insurance executives we surveyed Businesses are increasingly joining blockchain
anticipate the volume of data exchanged with consortia to find solutions to industries’ biggest
ecosystem partners will increase over the next problems. Hyperledger and Ethereum Enterprise, two
two years. of the largest, boast well over 100 members.
26 #INSTECHVISION Technology Vision for Insurance 2018You can also read
